Which Policies Matter Most to Manufacturers?

By Al Bredenberg

October 16, 2012

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A new effort to raise awareness about issues relevant to manufacturers and get more manufacturing professionals to the polls on Election Day could change the course of industry in the U.S. What are the legislative actions and political issues that top the list of concerns among American manufacturers?

One Voice, a lobbying group formed by the National Tooling and Machining Association (NTMA) and the Precision Metalforming Association (PMA), has announced a “Get Out the Vote” effort directed at manufacturers, urging them and their families to vote in the presidential and congressional elections on November 6. Manufacturers and their families, says an announcement from the group, “account for 7 percent of the voting age population — a critical number in a Presidential race that may be won by a 1 or 2 percent margin.”

On a new advocacy web site created especially for the initiative, One Voice identifies five key policy issues for U.S. manufacturing:

Energy

Regulation

Tax reform

Trade enhancement and enforcement

Workforce recruiting and training

The National Association of Manufacturers (NAM) generally focuses on these same issues, urging policymakers to “cut burdensome costs on job creators.” The organization charges that because U.S. “policies on taxes, energy, tort and trade, it is 20 percent more expensive to do business in the United States than it is in the countries that are our nine largest trading partners.”

One Voice points to rising energy costs as a vital concern for manufacturers. Manufacturing is inherently energy intensive, and energy costs affect industry across the supply chain.

"Energy costs have increased rapidly over the last two years, placing U.S. manufacturers at a significant disadvantage over foreign competition,” One Voice explains. “Small business owners and middle-market manufacturers in particular are not able to adjust the price of their goods and services enough to match steep energy cost increases.”

Manufacturers use a third of all U.S. energy resources, NAM says. This necessitates an “all-of-the-above” energy policy that takes advantage of “oil, natural gas, clean coal, nuclear power, renewable and alternative energy, and energy efficiency.”

In the regulatory arena, One Voice explains that small and mid-sized manufacturers “are often trapped between their much larger customers and suppliers and government regulators.” Even if they are not directly affected by restrictive regulations, such as those on greenhouse gas (GHG) emissions, they can get hit by a “trickledown” effect.

“All actions have unintended consequences,” One Voice warns, and “if the cost of manufacturing in America increases for a key supplier or customer, then the cost also increases for small businesses.”

Regarding tax reform, One Voice says that the U.S. “has the highest corporate tax rate in the developed world” and that the current tax structure is “a myriad of high rates, temporary credits, loopholes and outdated policy that restricts growth and reduces competitiveness.” Congress needs to drastically simplify and stabilize the tax code to increase incentives for the crucial small- and medium-sized business sector.

NAM adds that “nearly two-thirds of all manufacturers pay income taxes at individual rates.” In effect, this means that “a tax increase on individuals is a tax increase on manufacturers.”

In discussing trade enhancement and enforcement, One Voice zeroes in on currency manipulation and trade barriers imposed by China and other international trading partners. Interestingly, the organization says that 58 percent of its members are exporters, demonstrating the potential importance of trade enforcement to the manufacturing sector.

One Voice's policy manifesto charges that, “Any fundamentally misaligned currency is an illegal trade subsidy and should be considered as such under U.S. laws.” Tariff and non-tariff trade barriers unfairly target U.S. manufacturers and make it “more difficult for small businesses in particular to navigate the hurdles put in place by our trading partners.”

In the area of workforce recruitment and training, One Voice urges increased funding for manufacturing job training to strengthen the country's manufacturing base. “Washington should support public-private partnership projects that recruit, screen, train, place and retain workers in critical metalworking industries,” so the U.S. will be in a better position when the global economy rebounds.

The Association for Manufacturing Technology (AMT) echoes many of the themes set out by One Voice and NAM. In addition, AMT urges the creation of a comprehensive national manufacturing strategy aimed at rebuilding and strengthening the sector through its “Manufacturing Mandate.” AMT supports creating public-private partnerships, such as NAMII and the 10 other partnerships being funded by the federal government, coupled with intensive interagency collaboration at the federal level to bring off this strategy.

Such a policy would identify manufacturing innovation clusters around the country and marshal the resources of businesses, universities, community colleges, vocation-technical schools and manufacturing extension agencies to spur advances in manufacturing technology. This strategy, AMT believes, requires government to:

Incentivize R&D and innovation through funding, tax credits and other measures;

Increase American manufacturing's global competitiveness through tax and regulatory reform and trade improvements; and

Build a better educated and trained workforce through grants, scholarships and new degree and certification programs.